Expanded data key to opening up mortgage credit

Trended credit data, which offers an expanded perspective to lenders evaluating a credit applicant, could be key to opening up mortgage credit accessibility, according to an analysis by Equifax, one of the three major credit reporting bureaus. The analysis found that the use of trended credit data — an indicator of behavior beyond the traditional credit report — could boost mortgage loan approvals by 267,000 and home equity line of credit (HELOC) approvals by 65,000.

Trended credit data, which includes up to two years of payment records containing information such as actual payments and past balances, has afforded applicants determined ineligible through traditional assessment methods the opportunity to obtain credit. 'Ineligible' applicants, one study reveals, are likely as creditworthy as eligible-on-paper applicants, exhibiting similar behaviors.

"Giving weight to how borrowers pay off credit debt puts more power in their hands to manage their credit evaluation," said Peter Maynard, senior vice president of Global Analytics at Equifax, in a statement. "New ways of assessing consumer credit behavior through unique insights is something we are continuing to develop at Equifax, and opportunities to expand credit to consumers and mitigate for risk for lenders make these types of approaches solid ones for the entire marketplace."

According to Equifax, employing trended credit data is a relatively new route for lenders, introduced last fall. Lenders up until then weighed the information gathered in credit reports, which is limited.

Approximately one-quarter of those recently surveyed by the Federal Reserve Bank of New York believe it will be easier to obtain credit in the year ahead. All told, Equifax estimates that the use of trended credit data, and the resulting wider accessibility, could benefit up to 1.5 million consumers across all types of credit.